Monday, October 31, 2011

Mixed Feelings on Mixed-Use: 612 5th Avenue

Mixed-use properties can be a mixed bag. They don't always have the cash-flow that a pure investor looks for. Then, when you go to finance them, you've gotta come with at least 25-30% down in many cases. That can be tough for lots of people. One added bonus, though, is the bank looks at the income of the building rather than the borrower. So if you've got that hefty downpayment, but you're self-employed or your income isn't W-2, a mixed-use can be a great way to get into a purchase. Sometimes you can buy mixed-use at a relative bargain in a nice area where all the end-user residential places are already over-priced. But you're often on a noisier, commercial avenue - and you don't get the backyard or garden duplex for yourself. These mixed-use Pro's/Con's are why you see something like the mixed-use 469 Myrtle failing to fetch $1M, while its neighbor, the cryogenically-frozen for another year 204 Washington Avenue, just sold around $975K.

Today we take a look at 612 5th Avenue in the outer rim of South Slope, just past the Prospect Expressway. They want $1.499M for a corner property with 2 apartments and a bagel store that's paying $3,400/month. The listing doesn't show any pictures of the interior, but tells us the apartments have "brand new kitchens, bathrooms, sheetrock, parquet floors, electric and 2 new heating systems."

But if you really can handle mixed-use in this price range, aren't you better off on 258 Dekalb Avenue in prime Fort Greene right next to Fort Greene Park? And there's plenty of fishing left to be done, that we can think of, on a better stretch of Vanderbilt Avenue by Prospect Park. This isn't where we'd drop the at least $375K down it's going to take to acquire 612 5th Avenue. With that kind of money, you'd want some nice cash flow, a nice location, a nice interior - or hopefullly some combination of the three. We're not sure you get any of those over here. Maybe somebody will buy it just for the smell of yummy bagels being baked fresh daily, but do your due diligence on that C rating.

Pro's: corner property, mixed-use has some upsides for certain buyers, technically South Slope

Con's: hefty downpayment, not much cashflow, no interior pics, need to see more to justify this price

Ideally: why go here when there's better to be had?

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